"One of these things is not like the others. One of these thing just doesn't belong." -- Rational Choice, Social Science, and Public Policy

|Peter Boettke|

The New York Times recently ran this article on the work of Carl Hart. Here is a video about Professor Hart's work.

 

 

Professor Bruce Bueno de Mesquita book, The Predictioneer's Game: Using the Logic of Brazen Self-Interest to See and Shape the Future, was also discussed in the New York Times.  And here is Professor Bueno de Mesquita discussing who is rational.

 

Joe Stiglitz in the London Review of Books argues that there is no "invisible hand" of the competitive market.  He argues instead that "economic theory never provided much support for these free market views." In 2012, Nobel Prize winners Paul Krugman and Joe Stiglitz sat down for a conversation on the economy.

 

What does this say about the state of rational choice theory, social science, and public policy?

Comments

[Jonathan Catalan]

In most of what I've read of his, Stiglitz likes to give a very one-sided account of economic theory. For example, in his book review he mentions asymmetric information as one theory that undermines free market ideology, but he neglects to mention that part of this literature includes the private institutions that emerged to deal with problems of unequal distribution of information. Another example comes from his book on inequality, where he argues that bank management suffers from perverse incentives; nevermind that much of the empirical literature does not support this hypothesis.

[FriedrichHayek]

Did anyone notice that Krugman diagnosed Latvia as a country going through an unsustainable artificial boom and inevitable bust with productivity price effects -- and recommended austerity as the policy cure?

This would seem a prime opportunity to bang the drums for ABCT and do a bit of public education and embarrassing of the ignorant enemies of Mises / Hayek macro.

But all I've heard from Austrians is crickets,

Anyone know how to play this game?

Is the effort to keep Hayek / Mises macro a secret?

Krugman confesses that conceptually he can't make sense of an economy producing beyond capacity -- exactly what Hayek explains -- and proof that Krugman doesn't know squat about Hayek's explanatory mechanism.

No one is more famous that Krugman -- here's a chance to raise the profile of what appears to be secret knowledge.

[Roger Koppl]

Rational choice is still something of a default in economics, so it makes sense that deviating from it would have a higher marginal value for the deviating scholar in economics than in political science or psychology. I'm not endorsing anything, just making a rational-choice explanatory argument.